15 June 2026 
Julia Ascott, Employment taxes specialist
The First-tier Tribunal decision in MyPay Ltd v HMRC (June 2026) provides further clarity on the tax treatment of travel and subsistence expenses in umbrella company arrangements. While the immediate outcome reinforces HMRC’s established position on travel expenses, the case is more significant for what it says about mutuality of obligation (MOO) and its wider implications for employment status and employment rights, including holiday pay.
MyPay operated as an umbrella company employing workers who undertook temporary assignments sourced via recruitment agencies. The central issue was whether those workers were engaged under:
This distinction is critical for tax purposes, as it determines whether travel to an assignment location can qualify as business travel.
The Tribunal concluded that each assignment constituted a separate employment, and there was no overarching contract covering the periods between assignments. As a result, each assignment location was a permanent workplace, and travel from home was ordinary commuting, meaning no tax or NIC relief was available on the expenses.
The decision turned on the absence of mutuality of obligation between assignments. The Tribunal found that MyPay was not required to offer work once an assignment ended, workers were not required to accept future assignments and in practice, workers sourced work themselves via agencies.
While mutual obligations existed during assignments, there were no enforceable obligations in the gaps between them. The Tribunal emphasised that ongoing MOO is necessary to establish a continuous employment relationship, and without it, there can be no overarching contract.
Although MyPay is an expenses case, its analysis of MOO is directly relevant to determinations of employment status for tax and employment rights purposes. The tribunal reviewed the recent PGMOL and Athol House decisions when coming to their conclusion.
The case highlights a structure that is increasingly common in modern labour markets, with an employment that may exist during specific individual engagements but does not extend to the period between the engagements.
This creates a fragmented employment, where contracts (and potentially the employment status) are based on per assignment basis, however, there is no continuous relationship to link all the assignments together.
This aligns with other recent case law (e.g. PGMOL), where tribunals have accepted that mutuality of obligation during individual engagements may be sufficient to create a contract for that period, but not beyond it.
MyPay reinforces a key principle for status assessments, in that tribunals will prioritise actual working arrangements over contractual wording. There hasn’t been a great deal of success at tribunals where umbrella style “overarching contracts” are used and there is no real obligation to provide work, nor for the workers accepting any work.
The reasoning in MyPay also has important implications for holiday pay entitlement.
The Tribunal accepted that workers were employees during assignments, meaning statutory rights, including paid annual leave, can arise in those periods. However, the absence of MOO between assignments means:
This contrasts with scenarios where a genuine ongoing contract exists, such as in Harpur Trust v Brazel, where part-year workers retained full annual leave entitlement because the employment contract continued throughout the year.
While MyPay sits squarely in the umbrella company context, its findings are relevant to universities, where flexible and non-standard engagement models are common.
Universities routinely engage individuals on a non-continuous basis, such as external examiners, casual teaching staff (and other casual workers), short-term research assistants, etc.
In many of these cases, the reality may mirror MyPay, in that:
The key question is whether these are genuinely continuous employment relationships (e.g. Harpur Brazel), or a series of discrete engagements (Mypay and PGMOL). The resulting decision being essential to conducting appropriate employment status determinations, AND clarifying the position on rolled up holiday pay entitlement.
